Kelley's Big Bill

Politicians get ready to reboot telecommunications law

State senator Steve Kelley absent-mindedly twists his Thai iced tea in one hand and folds the edge of his napkin with the other while discussing the minutiae of telecommunications regulation. It's an easy topic for the third-term DFLer, who comfortably tosses out geek-speak like "overbuilt hybrid fiber-coax systems," then slows down long enough to note that "there is a high learning curve with these issues. It's all very complicated."

A stocky man with thick, curly gray hair, the three-term DFLer recently announced a bid for the U.S. Senate seat currently held by Republican Rod Grams. But to hear him talk, that effort pales in comparison to the 15,000-word-long piece of legislation he wants to introduce in the 2000 legislative session: This, he says, is his "Big Bill," the one he hopes will establish his legacy as a policymaker. The measure would scrap the web of laws--some of them almost a century old--that currently regulate services such as cable television and telephone. In the process, Kelley argues, it could catapult Minnesota to the forefront of a national debate over who delivers the currency of the information age and how.

Not everyone is enamored with Kelley's vision. While most interested parties--cable television and telephone trade associations, local Internet service providers and the League of Minnesota Cities--agree that the current laws need an upgrade, many are worried that the proposed rewrite is too drastic. Some even accuse Kelley of old-fashioned political grandstanding. And no matter what their position, all the stakeholders are busily preparing their responses while waiting to see how Kelley's plan squares with Jesse Ventura's own soon-to-be released telecommunications initiative.

Although Kelley's DFL credentials are impeccable, his proposal--especially when delivered in traditional stump style--sounds almost like a telecommunications version of Steve Forbes's presidential platform. "It's a flat-tax system with a drastically simplified regulatory structure," he announces. "I think if half of this bill is passed, it will be a big deal for the state and a big deal for all Minnesotans. It will attract more technology companies to the state, and consumers will see greatly increased competition and therefore more choices and lower prices."

He stops folding the napkin, pauses, and declares: "We're seeing so much--so much--rapid change in telecommunications that the government can't afford to be this far behind."

Current rules, Kelley argues, are mired in the distant past--the time, less than a decade ago, when "telecommunications" meant either telephone or cable television. One set of companies kept prepubescent lovers in constant contact while the other specialized in filling your screen with reruns of Punky Brewster. Since the two types of firms offered such different services, they were regulated by separate sets of laws at both the state and federal levels.

Since then, however, engineers have figured out that voice, pictures, and just about any other kind of data can be reduced to the same kind of signal and transmitted over the same wires. Thus a cable company like AT&T--the new owner of local cable provider MediaOne--can offer a "broadband" package of cable television, high-speed Internet access, and digital telephony. And a phone company such as US West can offer high-speed Internet access over telephone wires using a technology dubbed digital subscriber line (DSL); one version of the technology offers connection speeds fast enough to deliver high-resolution Punky Brewster episodes. And just to complicate matters, digital wireless companies are exploring the possibility of delivering high-speed Internet access via the airwaves.

Amid that maelstrom of technology, Kelley points out, state telecom laws have stood essentially unchanged since the 1980s. Cable companies are predominantly monitored at the city level: Firms must negotiate franchise agreements and pay fees in each city where they offer service. Phone companies' rates and performance, meanwhile, are overseen by the state Public Utilities Commission. And wireless companies are not regulated by the state at all.

To Kelley, none of this makes sense at a time when telling a phone company from a cable firm is getting harder than sorting out a roomful of Sneetches. "Today, the lines between these different industries are blurring," he says. "My fundamental philosophy is that these guys are all in the business of pushing bits and therefore should all be regulated under one system." Consequently, his plan calls for replacing the city-level cable-franchise fees with a statewide tax. And if phone companies have to open their networks to competitors--as they've been forced to do under the federal Telecommunications Act of 1996--then cable companies will have to do the same.

Not surprisingly, the proposal has raised some eyebrows. "We think Kelley's intentions are good," says Mark Erickson, a member of the League of Minnesota Cities Telecommunications Task Force. "But it's simply too much too soon." Erickson speculates that Kelley, who has previously had trouble drawing attention to the issue--a less sweeping bill he introduced last year never came to a vote--decided to "blow it all up and rewrite the laws." And if the senator sought to get policymakers' attention, Erickson adds, it worked: "He's got us listening."

One of Erickson's numerous concerns is that statewide cable regulation will get rid of protections currently accorded to municipally owned utilities such as the cable company in his western Minnesota hometown of Lakefield. If that happens, he adds, small communities could find themselves without adequate service. "We're at the bottom of the tech food chain out here," he notes. "Economics 101 says [providers] look at the metro first."

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